Amazon seeks ballot measure to undo California tax

Tue Jul 12, 2011 12:58pm EDT

SAN FRANCISCO (Reuters) - Amazon.com Inc has taken the first step toward asking California voters to repeal a new law requiring websites that forward shoppers to it to collect sales tax, a spokeswoman for the state's attorney general said on Monday.

The attorney general's office received the petition on Friday and will prepare a title and summary for the initiative, which would require nearly 434,000 voters' signatures to qualify for the ballot, the spokeswoman said.

California's leaders approved the law last month as part of a package of budget bills aimed at closing a roughly $10 billion deficit to balance the state government's books.

States governments are seeking new sources of revenue and growing online retail transactions are attracting their attention.

Seattle-based Amazon had warned it would dump California-based websites that are its affiliates if the law, expected to generate $200 million in revenue, was approved.

Supporters of the law said it would put the affiliates, who had not collected sales tax for business they forwarded to Amazon and other online retailers, on a level playing field with brick-and-mortar retailers.

Website operators who had partnered with online retailers and earned a share of sales from customers forwarded to them said the tax would kill their businesses.

Ken Rockwell, who operates the photography site www.kenrockwell.com in La Jolla, Calif., said online retailers cut ties to him after California's law was approved.

"I'm trying to figure out some other payment scheme," said Rockwell, who has operated his website full-time for seven years. "That business model went away. I've got to look for new business models."